Selling A Business and Dealing With Your Employees

Working with employees while selling your internet business

A big concern that usually crops up for our clients is how to handle their employees in lieu of their decision to sell a website business. The fears surrounding communicating to the employees that the plan to sell the internet business are moving forward are not unfounded. The uncertainty of how employees will react initially and how they will perform during the process can be worrisome to some employers. The last thing they want and need is employees that cause problems for the company, in the midst of negotiations, because they are unhappy with the prospect of losing their job security.

We usually suggest the following advice to our clients depending on the circumstances. Until there is an offer that is tabled and accepted, there is no reason for the news to be broken to the employees. The main advantage of retaining an Internet business broker is that the prospective buyers contact the broker and not the seller, so there are not going to be phone calls from suitors that get mis-directed to the employees. That is the worst case scenario which can create fear and animosity and ensuing poor on the job performance. Depending on the relationships and the type of employee(s) they have – this will define how open an employer can be from the getgo. But for the most part, it is wiser to create a business as usual enviroment until a deal looks like it will be signed or is signed and will close on a specific date. That usually gives the seller at least a couple weeks, but normally closer to a month, to break the news of the termination of the job.

The other important factor is job severence. We usually advise or clients, at their personal discretion, to offer a severence package that rewards their employees according to the length of employement, loyalty and overall importance to the success of the business. Depending on the size of the sale, I believe a 6 week to 3 month salary bonus is appropriate compensation for valuable employees. In addition, offering good references and suggestions or leads to other opportunities will be appreciated.

While most employees will generally be happy overtly for their employers – providing they have been treated well during their tenure – there will be some anxiety that undoubtly arises from the unknown of their next step. Most of this can be alleviated by the compensation package and strong references. In some cases, this may be the impetus for an employee to go out on their own and start their own website business and emulate what their employer accomplished.

When I sold my first company, Hammocks.com , I was open about my intention of selling the business prior to taking this step. In addition, I used the carrot of severence bonuses – 2% of the sale in this case- to keep them in-line with the goal. Finally, I offered a great idea for another business niche and support to launch it – www.piggybankworld.com – that allowed my two employees an exciting and evolved future as well. My mentality was that they had helped me achieve my success and goal of selling, so I wanted to reward them too for their hard work and loyalty.

In conclusion, being honest and respectful is a good policy with employees (and in life!) Once the deal looks like it will close or is securely set to close, then take the employees to dinner and break the news(if you haven’t already) to them over a great meal and some wine. Their fears will be allayed and their sense of worth will be obvious when you describe their severence package.

David Fairley is President and Founder of Website Properties.com. Having started Hamocks.com, Strollers.com and Drums.com as an early e-commerce entrepreneur, David's 25+ years of experience in the internet and Website Brokerage industry gives him a unique and experienced outlook on all things internet.